The key to boosting retirement savings is putting much of the process on autopilot, said Robert Kaplan, vice president and national training consultant for ING's U.S. Retirement Services. At the recent ASPPA 401(k) Summit, he described the success automatic plan features have had in improving participant outcomes.
Workplaces offering 401(k) plans that require opting out instead of opting in, he said, have 90 percent participation rates. Increasing employee contributions automatically over time helps overcome inertia, but sponsors need to give participants plenty of lead time so they're aware of the upcoming change. Similarly, automatic rebalancing helps overcome emotional reactions to market changes that lead participants to "buy high and sell low."
Although target-date funds have been abused lately, Kaplan said that "the vast majority of new dollars goes to these funds." Managed accounts also help improve outcomes for participants. "People say they want help, but they don't want to lose control," Kaplan said.
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